NEW YORK The
North American steel market will see stronger sales in 2014 and
2015 with improving construction markets and overall economic
conditions expected to boost the steel industry, Gerdau SA
executives said in a conference call with investors Oct.
"Despite all the
uncertainties related to the debt ceiling, we remain optimistic
that the U.S. market will post improvements in the next year,"
Gerdau president and chief executive officer Andre Gerdau
Johannpeter said. "In 2014, there should be improvement in the
North American economy of 2.6 percent (gross domestic product)
growth, and steel consumption should grow by 3 percent, mainly
driven by the automotive, power and non-residential
The outlook for an
improved U.S. market comes after a weaker third quarter for
Gerdaus North American operations compared with the same
period last year.
The Porto Alegra,
Brazil-based company saw a decline in shipments and a
33.6-percent year-on-year fall in profit margins in the United
States in the third quarter due to slow overall GDP growth,
tepid construction activity, and high levels of imports.
"In the United States
and Canada, we sold 1.6 million tonnes, 9 percent less compared
to the third quarter of 2012, and this was a consequence of a
high level of imports in the period and the fact that the
market was weaker than expected," Johannpeter said.
profits also took an $8-million hit due to the temporary
closure in August of its Cambridge, Ontario, melt shop (
amm.com, Aug. 6), where it is now sourcing billets
from its Whitby mill.
But construction and
macroeconomic indicators point to an improvement over the next
couple of years in U.S. sales, Johannpeter said, with the
architectural billings index (ABI) reaching 54.3 in September
amm.com, Oct. 31) and the purchasing
managers index (PMI) reaching 56.2, and the International
Monetary Fund indicating a likely 2.6-percent GDP growth in
2014 vs. 1.6 percent in 2013.
"For 2014 and 2015 the
prospects are better, since GDP indicates growth of 2.7 percent
and steel consumption (growth of) 3.7 percent, and people
believe well see a rebound in the nonresidential
construction market. And also infrastructure is improving in
many states, and there seems to be more money for
infrastructure in some states," Johannpeter said.
Gerdau Long Steel
North America was among five U.S. rebar mills to file a trade
petition to investigate rebar from Turkey and Mexico, and if
trade relief is granted, pressure from imports could ease next
amm.com, Oct. 30).
"GDP was lower than
expected and this was reflected in construction, our main
market, and the imports were above average and spreads were
pressured, which was reflected on our margins," Johannpeter
said. "(But) for the next two years, we expect conditions to
improve, though its very difficult to say exactly how